NEW YORK, April 23 /PRNewswire/ -- Dr. Tom McPeak, Ph.D., a noted land economist, has issued a position paper outlining the economic benefits that result from the use of private transfer fees by developers to defray infrastructure costs associated with property development. Through his analysis, titled "The Economics of Private Transfer Fee Covenants," Dr. McPeak outlines the benefits that three key constituencies – developers, home buyers, and the greater community – receive in return for the 1% fee that is paid each time the subject property is sold.

For developers, transfer fees help reduce the sales price of their properties, since all the infrastructure development costs do not need to be recouped from the initial sale. In addition, should the future income stream from the transfer fees be sold to others, the subsequent infusion of liquidity can help restart stalled projects in need of capitalization.

For the homebuyer, market forces dictate that homes with transfer fee covenants will be cheaper to buy than those without such obligations. As a result, buyers of such homes will incur lower costs to buy the home, with resulting lower mortgages.

According to Dr. McPeak, the community benefits as well. That's because a portion of the income generated from the private transfer fee covenants is typically dedicated for the specific purpose of reinvestment in local communities; through support of non-profit community-based charitable organizations.

In summarizing the benefits of private transfer fees, Dr. McPeak stated: "When the buyer's needs, the developer's needs and the community's needs are balanced, and the parties to a transaction come away satisfied with the bargain they have made, it is referred to as a Pareto-efficient transaction. An economic system that is Pareto-efficient is an important metric for evaluating economic efficiencies and public policies."

Manhattan-based Freehold Capital Partners (fka Freehold Licensing) has partnered with real estate developers across the United States in order to more fairly apportion development costs and to bring liquidity to real estate development.